Euro (FXE) Rallies Across Board

The Euro (EUR) soared against the US Dollar (USD) and other major currencies after the successful bond auctions by Portugal, Spain and Italy were followed by Trichet's comments about the near term inflation in the Euro zone. Earlier today the European Central Bank kept the interest rates unchanged at 1%, which did not really influence the currency markets, as the move was already expected. What triggered the rally was the ECB president Jean-Claude Trichet's press conference afterwards. He said that a near-term inflation is a real possibility, especially because of the rising commodity prices. And while he was quick to suggest that it would not become a threat to the price stability, investors interpreted it as a rate hike possibility sooner than previously thought, thus pushing the Euro higher. As a result, the EUR/USD performed a powerful rally, jumping from 1.3090s all the way to 1.3380, although it retreated during the last couple of hours and currently is trading at 1.3350s. The Euro rose against virtually every major currency as well, namely against the British Pound (GBP), Swiss Franc (CHF), Japanese Yen (JPY) and etc. The EUR/GBP moved higher from 0.8310 to 0.8420s, and the EUR/CHF gained 200 pips, jumping from 1.2680 to 1.2880. The EUR/JPY, meanwhile, soared from 108.70s all the way to 110.60.